One of the first considerations upon receiving an employee complaint is often whether to involve counsel in the investigation. A recent published decision from the New Jersey Appellate Division, C.S. v. Brick Recycling Company, provides guidance for employers on that issue, especially when the employer may want to rely on the investigation as part of its defense in a subsequent litigation. The decision examines the balance between the work product privilege over investigatory materials with the waiver of such privilege by relying upon the investigation as an affirmative defense. Notably, the Court rejected an all-or-nothing approach, instead requiring a detailed analysis by the trial court to determine whether disputed materials are sufficiently related to the affirmative defense, or if they are only tenuously related and thus still entitled to privilege.
The Facts:
Plaintiff alleged that he was sexually harassed and stalked by a coworker. After he reported the harassment to the company’s owner and president, the company engaged an outside law firm to investigate plaintiff’s allegations. Plaintiff resigned his employment while the investigation was ongoing. At the conclusion of the investigation, the investigating attorney issued a 45-page report substantiating the harassment claim. Plaintiff then filed suit under the New Jersey Law Against Discrimination, alleging sexual harassment, constructive discharge, and related claims. The company filed an answer which included an affirmative defense that “[d]efendants acted in good faith, without malice, and with the reasonable belief that their actions were reasonable under the existing facts and circumstances.”
During discovery, the company produced the final investigation report and attachments, along with other documents, but withheld certain materials, including a draft investigation report, attorney notes, and the retainer agreement and related emails. The plaintiff sought those materials, arguing that the employer had placed the investigation at issue by relying on its response to his complaint as part of its defense. The trial court ordered that the disputed materials be produced, concluding that none were privileged.
The Appellate Division’s Opinion:
The Appellate Division begins its opinion by analyzing the seminal New Jersey opinion applicable to workplace investigation privilege, Payton v. New Jersey Turnpike Authority. Under the Payton framework, courts must determine whether the materials were created for the purpose of providing legal advice or preparing for litigation, or instead were created as part of the employer’s ordinary workplace obligations. The Payton court further recognized that even where an employer waives privilege by relying upon the investigation as an affirmative defense, some documents created or identified in the investigation may be so “tenuously related” to the defense that they need not be produced during discovery.
While noting that the phrase “tenuously related” was not defined in Payton nor any subsequent opinion, the Appellate Division in C.S. concludes that it would “appear to exclude documents or portions of documents that are too remote or attenuated to the affirmative defense to warrant their disclosure.” It suggests that when conducting an in camera review, the trial court should consider whether a document could substantiate the employer’s affirmative defense or, alternatively, weaken it. In essence, the trial court must consider each document – line-by-line, if necessary – to determine whether it falls within the scope of work-product privilege and if so, whether it is sufficiently related to the employer’s affirmative defense to require disclosure.
Ultimately, the Appellate Division remanded the matter for a renewed in camera review of the disputed materials and required the trial court to issue a detailed ruling summarizing its findings. In remanding, the Appellate Division noted a few key points. First, the fact that the investigation commenced several weeks prior to the initiation of the lawsuit was not dispositive, as there is no requirement that litigation commence in order for privilege to attach (although timing can be important). Second, although the investigation report was not specifically listed as an affirmative defense, the employer’s affirmative defense, quoted above, stating that it took reasonable action encompassed the investigation and thus a waiver analysis was required. Third, the Appellate Division questioned whether the draft report should be disclosed, analogizing it to draft reports by expert witnesses, which are generally not discoverable.
Bottom Line: This case is a reminder that workplace investigation privilege in New Jersey is nuanced. While employers are not automatically subject to a blanket privilege waiver by relying upon an investigation as part of their defense, it should be assumed that the court will closely scrutinize investigation-related materials.
Please contact a Nukk-Freeman & Cerra team member if you have any questions or would like further assistance.